LCI Industries (LCII) Earnings Call Transcript & Summary

Good morning, everyone. Let's go. Thanks for joining. Well, welcome, everyone. We're going to go ahead and get started. I'd like to thank you all for attending our -- I believe this might be our first investor event that we've done like this ever in our history. So thank you for joining us. I'm going to first make note of our forward-looking and safe harbor language. We will be talking about some forward-looking -- have some forward-looking commentary today. I'll just -- please make note of that on Page 2 in the presentation. And with that, I'm going to kick it over to Jason to start things off.

You don't want to read that?

No.

Okay. Well, Brian didn't tell me I could wear jeans today. I would have worn jeans if I would have known it was acceptable. You guys hear me okay? Okay, good. So look, I want to start off by saying welcome to our new headquarters here. We just moved in a few months ago, and it's a pretty cool place. We're excited to be here. Thanks for taking the time out of your week to come here. It was a huge week for the industry, obviously, we got the open house going on literally right next door. We're interested to hear how everything works out for the dealers and the OEMs by the end of the week. And then I just wanted to make a quick note. After the event here, after we wrap up, we have a OneControl unit out in the parking lot here. We'll be available to demo that. We've been talking about OneControl for about 5 years. So you guys have heard about it. We've talked about it. But if you actually want to see it work, we have it all set up in one of the coaches, and the OEMs are adopting it at a pretty good rate right now. We also have our Edison concept vehicle, which is our electric vehicle chassis. So we announced that, we did that sometime in the last 12 months. So we've got that here, we can demo that. And then we can look at some of the other innovations that we've got here that -- if you guys want to see some other things. So first slide, global locations. This is just a quick outlook of our footprint. We've expanded quite a bit, obviously, over the last decade. The key here is that we can produce our products for our industry in just about anywhere in the world that matters. And then looking at our growth, especially looking at the last couple of years, the thing that ought to stick out is that we put $2.5 billion to the top line -- just about $2.5 billion to the top line over the last 2 years of the COVID boom. So -- but probably, if you look at the right-hand side of the chart, the change in the growth. We've been growing since I've been with I think the company was about $100 million in revenues. As you can see, we're trailing 12, we're over $5 billion today. And we've grown the bottom line strongly as well. So $800 million in EBITDA over the last 12 months. The last 2.5 years was extremely difficult in terms of bringing that $2.5 billion to the top line of our business. It did not come easy. We had supply chain issues, we had labor issues, all the things you heard about were significant issues for the business, but we pushed through it. We were able to convert. And I think what's even more important is that we gained market share over the 2.5 years -- last 2.5 years as well. There were a lot of customers -- a lot of competitors and supplier peers they didn't really hold up to the challenge, they fell down. We gained significant market share in chassis, windows and awnings, and some other components. So it's just a testament to our leadership team and how we manage through a pretty difficult time. And like I said, I came to the business in '94 when this was about a $100 million business. So like -- into the business, we had a singular industry. It was a manufactured housing industry. We supplied roofs and some steel parts, and that was about it. I stumbled on to RVs and put together a team and the next 1.5 decades, we really pushed hard to grow the RV business. But we did that so well that by 2008, 2009, we were about $1 billion and almost 100% in the RV business. And after '08, '09, the recession hit. It was pretty painful, and the Board challenged us to push into some new areas and diversify a little bit further past RV and housing. And we wanted to do that with as little risk as possible. So we kind of said, "Hey, look, how can we look in our backyards," out here in Elkhart County, where a lot of our facilities are. Use our -- leverage our leadership team, leverage our facilities and just build more in the plants that we already have. We didn't ever look too far, and we saw that Elkhart County was home to the largest population of shuttle bus manufacturing in the country. So we adopted our RV windows, started making shuttle bus windows. We then moved from shuttle buses to school buses, where we're really the only guy making school bus windows today in the U.S. We looked in our backyard, and we saw the lots of cargo trailers and equestrian trailers and utility trailers to the tune of 800,000 being used a year. A lot of those are produced right here in Elkhart County. So we produce the axles and suspensions and sealed parts for those. If you look at Marine, it's home to the largest population of pontoon builders in the country. So we adapted our furniture manufacturing to the seating for pontoons and our glass to the glass systems in the boats. We adopted our vinyl windows and manufactured housing to residential windows. We said we're building vinyl windows for manufactured housing all day long, why can't we do stick build housing. And so we did that. And then obviously, we got into the aftermarket, all of our existing components. We just had to work on packaging and develop relationships with the dealers versus the OEMs. That was an easy change for us. So -- and what I can tell you today is sitting here when the RV industry is kind of seemingly going over a little bit of a cliff and into a down cycle, our business feels so much better today than what it did in '08, '09 when we were just literally in the RV business. I can't even tell you. We're able to focus on a lot of different things where we've had great people that in '08, '09 would have had to leave the business or we would have had to exit the business, we're moving them into the Aftermarket. We're moving them into the Marine business. We're moving them into the residential business, and some of these other diversifications that we went through. And we've obviously grown internationally, too. So taking our same industries here, making some of the same applications over there. We'll talk about that in a minute. So if you look at kind of the 80-20 of our business, RV, Marine, Aftermarket, that's 80% of our business. That's what gets most of our focus in this business. I'll talk about Aftermarket for a quick second. That's driven by the more OEM products we sell, and you guys know we have high market shares, the more that's just going to drive Aftermarket business. So the more units that are produced, the more Aftermarket business is going to grow. And really, it works like this. Customer has a problem with a part or an assembly in their unit, they call the dealer. Dealer says, "Okay, what do you want to replace? Slide out or a leveling system or an awning? What brand is it?" Well, it's a Lippert. And they come in for service and they get a replacement on that part. It's a really simple process that drives a lot of business for us. And then international and other adjacencies, it's still a focus. There's still a lot of opportunity there with all the things that I just mentioned in the previous slide. It's just going to be slower growing simply because the customers respond a little bit differently. It's not here in the Elkhart County, the customer relationships work a little bit different. We're still going to focus on those areas. It's just a slower growing part of our business. I have to mention our manufacturing capabilities. I think what gives us one of our greatest competitive advantages is that we can do so much. You look at from furniture and soft goods and mattresses to glass processing and coatings to the electronics business we have in Detroit, lamination, metal fabrication, aluminum fabrication, plastic molding, power and motion systems. We can do electric motion systems. We can do hydraulic motion systems. So we've got all these capabilities. When a customer comes to us with need -- with some kind of need end product, there's nothing in our manufacturing disciplines that won't allow us to build some of those products that they're going to ask us to build. And then our daily production. I think besides the staggering number of products we build every day, you look at 2,500 chassis a day. Some of these structures are 40-foot long. We build a lot of chassis, our axles and suspension systems, 20,000 windows a day for RVs and boats and manufactured housing. 2,200 awnings a day, 2,000 doors a day. We build a lot of products. It's really important for you guys to know that there's a lot of SKU variability with those products. It's not chassis with 5 SKUs. We've got 750 SKUs of chassis. We've got 5,500 SKUs of windows. We've got several hundred SKUs of entry doors. So we not only have to be good at producing a mass amount of product, but we have to do it with a significant amount of SKU variation and complexity. Our key competitive advantage is, I think -- I'm sitting in your guys' chair, the one thing I'd want to walk away from this meeting with us, okay, everybody competes on quality, price and service, what does Lippert have that sets them apart from the rest? And as I talk through some of our competitive advantages and our pillars of our business, our foundation of our business, what makes us successful, just keep track of how many times I'd tell you we're doing something different, but we put resources there. A lot of companies talk about culture and innovation and customer experience. But when you turn around and ask them what kind of resources they have in place, they kind of blank out. So I'll talk about the resources that we've got toward all these critical things that are separating us above and beyond quality price and service. And I'll start with just the customer relationships on this slide. With RV and Marine, most of those customers are right here in Elkhart County. I've been in the business for 28 years. My team has been in the business for almost as long. We've got significant relationships with all these customers. So that allows us to make decisions quicker with them. It allows them to trust us more and bring us more opportunities and revenue and things like that. We go to church with these guys. We eat with these guys. We -- our kids go to school together. We just have significant deep, meaningful relationships with our customers that, frankly, I don't think exist in a lot of other industries and businesses. I'm familiar with a lot of other businesses around the country, I interact with a lot of other businesses. And a lot of businesses typically see their customers a few times a year. It's really, really difficult to establish a meaningful relationship with the customer when you only see them a few times a year. We're seeing ours literally every week. So these are the pillars of our business. Everything we do needs to tie back to one of these four things. If we're going to be successful, these need to be the foundation of our business. And I'm going to start with innovation. I think the most important thing, again, going to resources is that we've got over 200 people in this business dedicated to R&D and innovation. Again, I know a lot of businesses around here, a lot of them don't have any. A lot of them might have 1 or 2, we've got 200. So when you talk about why are we good at innovation, it's because we got a lot of people lined up behind the innovation part of our company. The RV industry and the Marine industry in general will tell you that we're their R&D lab, we're their innovation lab. When they need innovation and they need ideas, they come to us. They might have an idea and then they come to us to have us build it. So one of the things with respect to the products you see here, they're not really new products. Their innovations or 2.0 or 3.0 iterations where we've added bells and features to our existing products. That's where we get most of our content growth. that's where we get most of our revenue growth. Our addressable market growth is through bells and features and whistles on existing products. Yes, do we build new products once in a while and come up with some new ideas? Yes. But a lot of this stuff is taken in existing product and developing the next generation of that product. And I'll give you a couple of examples. The glass entry door, we launched that here recently, and it's taken the industry by storm. We've got other entry door competitors. We typically build a fiber glass wall. We decided we're going to do a glass look and match it with the windows. Well, guess what? Our competitors don't process glass. So we have this unique capability to process an entire door, exterior and glass, provide a different look and a different opportunity. By the way, it is significant upgrade and increase in cost of the customer, and they're buying it. And there's no answer from our competitors because they can't do it. The on-the-go ladder, the customers came to us -- our RV customers came to us last year about middle of the year. The only -- the biggest ladder supplier in the community -- the supplier community could not keep up. So they came to us and said, "Hey, what can you do? Can you make ladders?" We opted to -- our innovation team came up with an idea to put a prep on each of the RVs. So a bracket that sits at the top of the RV. And we found a ladder that was compatible with the bracket, so the ladder can be snapped in the Aftermarket. So we now sell ladders to the dealers. They don't come standard on the -- they don't all come standard on the OEM product anymore. We sell an Aftermarket ladder that didn't even exist for us prior. You look at the axle products, again, the axle has been pretty similar, standard over the last handful of years. We had an independent suspension, and we now do an ABS, neither of those have existed prior to this year. We launched ABS with Grand Design, people have had ABS in their cars for decades, wasn't available in RVs until this year. So again, significant upgrade and cost to the customer, but huge innovation, we're doing a lot of our marketing right to the retail customer today. So they're driving some of this pull-through. That's innovation. On quality, our quality focus continues to get stronger and stronger. If you look at the automation projects we've put money toward over the last 5 years, that total is about $100 million in projects we put toward in the last 5 years. We've got about 20 more projects in the queue right now. We put those in pipe by how they rank in ROI. If you were to go to Goshen and see our beam processing facility, it's about a $30 million project with 11 automation stations all lined up. It's pretty impressive. But our most successful projects are $1 million to $3 million projects that provide significant return, quality improvement, safety improvement obviously improves the whole labor situation. We need labor when the market gets -- when the market struggles to find it and automation is a good answer. And then we hired an outside VP of Quality, 17 years at Eaton, just this year. So one of the things we decided to do was say, "Hey, look, we want to bring some outside thinking into quality." This quality in the RV business and marine business, I think, in large, is homegrown for the most part. We brought some external focus in. Her name is Katy Grub. She started this year. Like I said, 17 years at Eaton and she has revamped structure and processes and people. Leadership and culture probably the most important thing I'm going to talk about, our business isn't good unless our people are here. We realized about 10 years ago, we went on a culture journey, that our attrition was probably average. It was probably the same as everybody else, 125% here in the county. But we said, "Hey, look, that's not good enough." And we went and we said, "Hey, look, what's driving that? What people are leaving? Why are they leaving? It's leadership." So we introduced our core values to the company. We've got our leadership values here and our core values over here. We just hold people accountable to these values now. If you want to lead in this company, you should have these core values. You need to have our leadership values. If you want to be an independent contributor here in the company, you've got to be aligned and live to the core values or you can't be here. What that's done is drive more people to want to be at our business. We've got people coming today with passion and energy because things are fair, things are consistent, things are predictable. They know their leaders are being trained, and we've got resources in this company. Again, the resourcing, we've got 30 people in our culture and leadership development department. You asked most companies, if they have a culture and leadership development department, they'll say, what are you talking about? We've got 30 people in that area, and they do jobs from leadership development and coaching, personal development and coaching, philanthropy. We've got an external-facing leadership academy. We've got a health and wellness group. We've got a company Chaplin. So we've got all these resources that are dedicated specifically to culture and leadership development where most other companies don't. I know because I talk to business leaders all the time. So -- again, I'd say the #1 thing on culture and leadership is just the resources that we put in place to make sure that our people are better taken care of. And they know that we're serious about culture and leadership development because we've got people there, and they've all worked at companies where they don't have anybody in culture and leadership. And another area where we've really innovated is customer experience. We had an epiphany a few years ago. And you'll hear from Nicole Sult later, who's our Customer Experience VP that we -- that service isn't experience. Taking 100,000 phone calls and e-mails a month, customers needing replacement part, customers needing a repair on their part, dealer needing a part, questions on how a part works or how a product works, 100,000 a month, well, we can give a good experience on that call, and we do our best there. But what we weren't doing is going out to the customer to see what they needed proactively. So in 2020, we set Nicole on a mission to develop a team that was going to do just that, go out and meet the customers, the retail customers where they're at, on the campgrounds, at rallies, social media. And we've got 20 people on our team now that are dedicated to making sure that, that customer experience is better. We want to know from the retail customers what we can do better, how our products can be better, how the OEM products can be better? How the industry and lifestyle can be better from there? So we just listen. And we've been listening for a couple of years now. We get hundreds of thousands of engagements through social media, through our campground project, through our getaways, through our giveaway, and our Scouts program. So you'll hear more about this from Nicole in a little bit. But probably the biggest thing and biggest takeaway here -- again, now that we've dedicated 20 people in terms of resources, but this is probably the single largest thing that's elevating our brand today because people see that we care. They see that we're out there meeting with them when other customers, whether they're OEMs, whether they're dealers, whether they're other suppliers. They're not necessarily doing that. They don't have people dedicated to just go out and check up on people as they're using their RVs or boats, and see what we can be doing better. So they know what we care, that's elevating the brand, which is important for us. And then lastly, sustainability focus. What I want to say about our commitment to sustainability first is that -- when you think about sustainability, we think about recycling, we think about waste, we think about power consumption, we think about reducing emissions. We did hire a Sustainability Director this year. His name is Kartik. He started, he's excited. He's got a whole lot of initiatives. We did -- I did want to highlight a project we did the other year where we automated a glass processing cell. And because we're starting to think about how sustainability should factor into any new projects we do with respect to continuous improvement, this particular process, we were processing glass with 100 people, used 1 million gallons of water a year to clean the glass through all the different processes because the processes need water to complete the process. We reduced from 1 million gallons a year to 80,000 gallons a year in that one particular project. So just making environmental and sustainability a part of the continuous improvement process can yield good results. Most people know that we have one of the only serving commitments to our community through our team members. So we do 100,000 hours of community service every year. We've been doing it for several years. A lot of other businesses that followed our lead and they're doing some of the same things. For us, it's really simple. We have a philanthropy team. So again, go back to the resources. We've got 4 people in philanthropy that drive a lot of these engagement projects for our facilities. Now what we ask our facilities to do is work with the philanthropy teams and do 3 projects a year. If they can do 3 projects a year and bring their team members and their families to those serving events, we can make a pretty big impact in the community. Environmental health and safety, we've got a picture of our mobile medical unit here. We launched that last year. And basically, it's a rolling doctor's office. We've got, again, resources. We've hired 3 people that can run around, dispense medication, do some exams. We've done over 2,000 blood panels just in the last handful of months that we've had it on the road. And it leaves here at 8:30 in the morning, and it sees a bunch of plants during the day. And when it's done, it comes back. Leaves the next morning, does the same thing. And our whole goal is just to help people start a health journey. And really, a lot of that starts with just people getting their simple blood panels that understand what their next step is in their health. So real quick before we get Brian on the stage here to talk about financials. Really simply, we have a lot of opportunity with our existing markets. RV, Marine, Aftermarket, our international adjacent markets, $11 billion in addressable market. I remember when we did our first slides and they were in the middle 2000s, and we had, I think, $1,000 in content, and we thought the RV addressable market was $2 billion. It's pretty incredible how far we've come, but how much is still left to go. So I'd tell you that innovation is driving that because we continue to innovate, we continue to find ways to increase the opportunities in existing products and product lines and find some new products every once in a while. We've got lots of runway on RV and Marine and Aftermarket and international adjacent products. And then growth of the outdoor lifestyle. I think Camping World has said it best in one of their recent calls, I've quoted what he said a bunch of times. It's just every decade, wholesale shipments increase. Every decade, more people move into the outdoor lifestyle. We saw, obviously, a boom during COVID where there's just a reconnection with the outdoors. And that's not going to go out of style. Family, community, the outdoors is never going to go out of style. And as the population grows, and I think -- as we look at -- you'll hear from Jen later on digital marketplaces, social media, just word of mouth. We're going to continue to grow, especially the RV and the Marine businesses because they cater to the outdoors. And then lastly, on our acquisition pipeline. And most of you guys know that we've done a lot of acquisitions over the last handful of years I've been with the business at least. And not only can we do a lot, we pick the right ones, we pick good companies. We really look for companies that have great leadership, great products, great growth opportunities. And most importantly, we really evaluate the competitive landscape. We do not buy companies that have 10 or 15 competitors. We don't buy companies that have really, really strong competitors because we just end up dumping a lot of resources into those businesses to fight. So we really are picky and choosy about our acquisitions. And if you look at our last 20 years, we started with RV, we started sprinkling in some Marine and then we eventually added into some international adjacent opportunities, and most of the businesses that we bought have been really additive to the business. They brought a lot of value. We've brought a lot of great leaders, even our executive leadership team they've come from some of the acquisitions that we made. So I think that closes my part of the presentation, so I'll give it to Brian. And then we'll get into panels, which I'm really excited about. Okay. There you go.

Thanks, Jason. So what does all that mean financially? Obviously, a lot of growth. I go back to touch on one thing that Jason touched on there at the end. You think about all that growth and look historically and the addressable market, and he mentioned the couple of billion, I think just in the 10 years or so that I've been with the company, I think that went from couple of billion to $5 billion, to $6 billion, $9 billion, and now it's at $11 billion, just through all the diversification and expansion into these different markets. And that makes the business much more complicated. So I think that's one of the things I want to address today is so what does all this look like? It's changed so much. We've grown so much. We went through the boom of the last couple of years. So what are our thoughts when we look forward? And so I'll touch on some of that here today. So obviously, you guys can -- you've seen the history. Jason touched on it a bit already. We're seeing tremendous growth. The last couple of years have been significant. And the one thing that I do, I will make note of, is that I wouldn't expect us to stay at those levels. We've already guided that things are declining in the RV market here currently. So there's certainly in a recessionary type environment that we're going to find ourselves in, in the coming months or however long it lasts. We certainly would expect these things to pull back a little bit, but hopefully offset by many of these other markets that I'll touch on when they look at break -- start to break some of that down. So certainly, from an RV perspective, that's where we're seeing tremendous growth when you see increasing over $3 billion for our North American RV OEM business this last year, tremendous growth. You see it, you're hearing it, the data is out there. Things have slowed a down here in the course of the last 6 months. But I think if you look back through recessions, and I'll talk about that a little bit more, it's to a level where I don't think it creates much of a challenge for our industry. Certainly, a change from all-time record highs, but they're certainly at levels that we think are meaningful and good for our business from a financial perspective. As we've expanded into the marine market, we've seen tremendous growth there, 52% CAGR over the -- since 2017. Certainly, some acquisitions in there, but tons of runway for further growth as you look at that market just because we're so much younger in that today and expanding into many different product categories through the diversified manufacturing capabilities that Jason touched on earlier. Same thing with Aftermarket. I mean, been tremendous growth. Certainly, CURT was a big part of that growth back in 2019 when you see the jump from '19 to '20. But still continuing to turn in double-digit type growth rates in that and expect that, it's softening a little bit. I think, when the consumer is trying to wrap its head around everything that's going on today in the marketplace that you guys are all trying to figure out as well as us, certainly, that's going to temper spending a little bit. But certainly not to the degree that we would anticipate on the OEM side of the business as production rates decline as much as they have. So continued long-term growth in that. I'm surprised, Jason didn't comment on it because I've heard him say it so many times. But when you talk about all that content that we've added, and the industry has never put more RVs on the road than it has in the last 5 years. And that's our content that in the next cycle which typically our RV'ers would be trading in their units 3 to 5 years, that's when you see a lot of aftermarket sales as they look to repair, replace and then upgrade components to sell it to the next individual. So certainly, tons of runway on the aftermarket side of the business. And then international and adjacent markets that Jason mentioned earlier, certainly tremendous growth there. Maybe not as aggressive as some of these other ones, given the dynamic in the European market that we're experiencing today. But certainly great opportunities there. And it would be remiss if we didn't go back to our roots and comment on manufactured housing a little bit, too. Certainly seeing some really nice growth rates there. The number of shipments in the manufactured housing business is -- I never -- I didn't think we would get back to these levels back from when it dropped below 50,000 units a number of years ago. It just seemed like it wasn't going to get back to these levels, and it has. So that's a great opportunity for us and a business that really requires very little capital for us. I mentioned earlier the recession, and so I thought it would be interesting to go back and look at the RV industry, look at Lippert through some of the -- at least the last recessionary environment that we've been in. Certainly, '08, '09 that Jason mentioned, I don't -- I haven't heard anybody talk about that being the expectation for a recession for us. But -- so certainly wouldn't expect it to be that dramatic. But I think it does tell the story that you can typically see RV lead into those and then lead out. So in our -- if you go back to '08, '09, specifically, we were actually able to take advantage of a lot of acquisitions during that type of environment. And you can see our growth rates skyrocket as we come out in 2009 into 2010. And -- so you would typically see in a recession a 10% to 15% type decline in the RV market. It would typically come down for -- anywhere from 6 to 18 months. But like I said, we'd lead out and it tends to pick up right where we left off, heading into a recession. So you would -- if you look back through 40 years, you'd see a good consistent trend line across many of our consumer discretionary type products like RV and Marine. And then today, as Jason mentioned, and we continue to talk about, our business looks a far different than it did back through these last recessions. The fact that you can see RV production decline as much it has and then see our other markets hold up to either be flat or up. It certainly is a meaningful difference from a financial perspective and what's doing for our financial results today and what we would expect it to do as we work our way through a difficult market. Touch real quick here since we got this group here today, ESG. Some of the quick updates on things that we've done this year. We did -- Jason mentioned our new Director of Sustainability. We spent a lot of time due to SEC requirements and reporting on greenhouse gas emissions, putting those systems in place so that we can continue to report on those as we're going to be required to do so. We've also done some materiality assessments just to make certain that we're aligned with our -- the investor community, our customers, our suppliers, internally across the leadership in the company, just what is important to everybody and make sure that we're focused on the right thing. So a lot of this we'll look forward to having in our second sustainability report. We launched -- issued our inaugural one in the last 12 months. So we'll have an update on a lot of these initiatives here in the coming 6 months or so. Capital allocation. I think you guys are pretty experienced with what we've done from a historical perspective. Always trying to look to make sure that we've got a balanced deployment strategy. So you see when we look forward, we would plan on it to be a pretty good balance, looking for the greatest returns, whether we're investing internally, returning capital to shareholders through a dividend or possible share repurchases. And then acquisitions, it's a part of our DNA and will always be a part of our DNA. So lots of opportunities out there. So we'll continue to look to deploy capital as balanced as we can on a go-forward basis. So long-term outlook. What does all that mean as we look forward. Certainly, I wanted to make note that coming from these all-time record highs, we are expecting things to slow here in the coming months, however long this lasts, but certainly then back to our long-term growth trajectory. So put some targets out there for ourselves, really looking for North American RV OEM to slow, as I mentioned, but then to return back to its traditional long-term CAGR. And -- by 2027, we think we can be north of 500,000 units again. Again, this is based on our crystal ball today. So everybody's got a different crystal ball. But the Marine market, I think it's -- as we've been continuing to say, it has performed a little bit different this go around than what RV did. It certainly didn't ramp up as quickly. So it's going to extend the restocking cycle a little bit longer than what we're definitely seeing on the RV side of things. But then we would expect that to slow at some point. I think most are saying it's much further out in the 2023, possibly some particular product categories, maybe even in 2024. But there would be some slowdown. But on top of that, we would be continuing to add our content per unit at historical rates like we've seen on both RV and Marine. Looking at some of the other markets, I would say, some slowness in them today, but not expecting to see a great deal of that. Most of them are performing at either a flat to up 5% to 10%, and I would expect that to continue from what we're seeing into the near term. And then long term, we would expect to continue to be able to deliver at our historical growth rates. So what that means is a top line by 2027 of over $7 billion. This does assume some typical acquisitions, at least the magnitude that we've done historically so that you can see what that could look like. So over $7 billion in revenues, over $1 billion of EBITDA and over $24 of earnings per share. So certainly exciting times for us to think back to -- I think in 2013, when I started with the company, I shared a story, like not like Jason's where it was only doing $100 million. But I remember tracking the first time we eclipsed $1 billion in sales for a trailing 12-month period. And to be looking at $7 billion is pretty exciting for us and our leadership team. So tons of opportunity there as you look at our addressable market, and we think that given our leadership in all the things that Jason talked about that these are definitely great opportunities for us to deliver for shareholders. And now for the next part, I'm going to turn it back to Jason. This is the part I'm probably the most excited about. We put panel together to -- you hear us talk about a lot of these things on our earnings calls and some of the one-on-one discussions that I've had with you, but to hear it directly from some of our customers and other participants in the market here from their mouth themselves, I think is pretty meaningful for you guys. So excited for this next part.

Yes. It's much better than hearing us talk, nobody is laughing, you guys in it like an okay mood today? Something happened last night? Jeez. Okay, I'm going to ask our panelists to come up. I've got Jon Ferrando, Jen Young, Nicole Sult and Phil Smoker. We'll do some introductions, and then we'll jump into some -- our panel discussion and do some Q&A afterwards. And just think about questions you might want to ask these guys, too, because they'll stick around for the Q&A and...

I think I'm sitting.

Yes. Go ahead, sit down because I'm going to do the same. All right. So before we get into the sum of the discussion, just let's go one to the next and just introduce yourself, a quick flip about who you are and what you do, and that would be a great place to start. So Nicole?

Great. My name is Nicole Sult. I have the opportunity of leading our customer experience team. So really excited to be in this area of the business, leading for RV and Marine. So I have about 9 years here at Lippert [Audio Gap] years in the industry.

Great. Good morning, Jon Ferrando, founded RV Retailer in 2018. Since then, grown the company to 106 stores in 33 states. Jason was -- when I jumped into RV in 2018, Jason was one of the first ones to reach out. So it's been a really great relationship since then.

Thanks. Jen?

Good morning. My name is Jennifer Young. I'm the Co-Founder of Outdoorsy. And I'm a new kid on the block, so haven't met anybody here. Can I just get a show of hands from anybody in the room that has heard about my company before today? Okay. That's great news to start. Okay. Definitely changes how I answer the question. So we founded Outdoorsy back in 2015. We're an outdoor travel marketplace. We've have grown the business to [indiscernible] cities. And we fulfill, on the consumer side, easiest way to search, find and book quality recreational vehicles; and on the owner side, providing all the tools, support insurance products to make the safetiness of the marketplace work for fulfilling vehicles on the trip. And behind the scenes, we're building an InsureTech business and then excited to share a little bit more as we go through the questions today about what the future looks for us in terms of new products and fulfilling customers journey and stays and accommodations.

Thank you. Phil?

All right. Good morning. I'm Phil Smoker. I'm the Executive Vice President of Sales at Smoker Craft. We're fifth generation. We're over a 100 years old, and we build under the brands of Starcraft and Sylvan and Smoker Craft. We build pontoons, fiberglass, deck boats and fishing boats and we're the fifth largest builder in the U.S.

Awesome. Awesome. So we've got awesome group of diversified panelists up here that can speak to the industry and the lifestyle and what the retail customers are feeling out there. I do want to say that probably the most challenging part, because you guys are also passionate about your businesses that, to get through all the questions or get through most of them, it's like 1- to 2-minute answers, and then we'll move on. So if you could just help me with that, that would be great. I'm going to start with Jon. First off, yes, I mean having you in the business has been a breath of fresh air. I think before you, no dealers proactively reached out. So it's just good to see somebody come into the dealer community with your kind of energy and innovation, and we're like excited to just ride your coattails. So welcome. So RVR has grown to $3.5 billion in just a few short years since entering the RV space. What is RVR doing differently than the rest of the field in the realm of customer experience that sets yourselves apart from the other dealers?

Yes. Thanks, Jason. So it really is around a couple of things. And Jason has been a great mentor, an example on the culture side. So for one, we're very focused on building a tremendous culture. At retail, we have close to 4,000 associates servicing our customers every single day across our 33 states. So we're investing in training and development, driving our core values. You can see Lippert's core values and leadership qualities right here. So we're very focused on building an exceptional associate experience, investing in our leaders and that is core to providing a great customer experience. And then we're investing across the board and the customer experience, probably to get the short version of it done. Right now, we've got over a $100 million of construction projects going on between -- that started last year that will roll into 2023. A lot of that is building service capacity, but also great sales showrooms so that our customers have, and associates have great facilities. We're investing probably in more in training and development than any other retailer out there, period. And then we're very focused on the customer experience. And this is where I saw the big opportunity in the industry, but the customer experience at -- from delivery to service and then building -- and owner relationships. So we're there with the customer until their last RV trip. So investing a tremendous amount, making sure we have so many new customers coming in, that they have a great experience in their RV. And then they'll come back and buy and service again and again. So huge investments on that side of the customer experience, which is really unique.

Yes. And I've seen you -- I talked about resources and committing to resources in my talk, and I've seen you guys commit a ton of resources to training and service, and industry badly needs that. Jen, I'm going to go to you next. One of the most impactful things, I think in the RV industry and more people coming into the RV lifestyle is a proposition for RV owners to offset their ownership costs. They have a payment to make. If they thought about only using their RV for an average of 2 weeks a year, which is what most people do, they've got 50 other weeks they could offset that cost of ownership, whether it's insurance or their mortgage payment, just running their unit a little bit. And you guys offer a marketplace to do that. So what's the impactful things about that part of the proposition?

I mean that's the no-brainer value proposition, as you just said, I'm glad that we can talk about that freely in this room. The truth is most of these vehicles only get used about 12 or 14 days a year, so what happens to the depreciating asset? The world's moved on in understanding how to how to take unused assets and make them or turn them into investment vehicles. And that's where I think Outdoorsy drives a ton of value for not just the homeowner, but also any young person in particular that's growing up these days not wanting to have a boss, not wanting the traditional like work in a company model. And so we're fueling a whole new category of power sellers, supported by everyone's interest of getting into the outdoor recreation and lifestyle. It's this perfect combination. It's like I have this thing, I don't use it. I could use it for my own personal interest, or I could use it to start to build a little bit of a small business. I could get 1, 2, 3 of these things, through mobile products and software and insurance that protects me all around. I don't have to build the resources, the assets, the operating system to do that. I just plug into Outdoorsy or a Wheelbase, and I can start to figure out how I grow rental income. Well, first of all, how we pay back the units that I bought and then how we grow rental income and potentially build a business around that. What I love about that story is not just like the payback period. We can tell you what number of bookable days we think you'll get in an individual market. And so you can easily calculate what that payback period is. But even more interesting, you now own the asset that you can also sell. So it's like every time you're buying something, you're actually making a significant return as well as paying back. It's the second largest purchase past a home. I mean I could go on. I love the fact that we're actually driving -- most of our revenue is driving GDP to households and income. And when we take a look at the recessionary times ahead of us, what is one of the 4 defensibilities? Side hustle. This is just a perfect side hustle.

You should corner Jen after the discussion here today because, I mean, she has 20-year-olds on their platform making over 7 figures, running multiple RVs on the platform, some pretty incredible stories. But I'm going to turn to Phil real quick. Phil, pontoons are the largest and fastest-growing segment. I don't know if anybody in this room knows that. But in the boat category, it's the largest and fastest-growing segment. Why are more and more people turning to pontoons versus the other segments?

Yes. It's been pretty visible because you can see how many units are getting into the market. I think the first thing is the aging population. It's so much easier to get on it and off a pontoon and to use a pontoon. And that goes for the lower -- the small families to young families. I have a family, or I do still have a young family, and it's so much easier to operate a pontoon than it is to deal with some of the other opportunities out there with boats. But then there's also the size of the boat. Everything right now is about experiences. And when you go out on the water, you want to have an experience, you want to have experience with people, with your friends and family. So the idea that you can get more people on a pontoon than you can other boats, goes a long way. And then I think the last thing that I would point out is the multifunctionality. Now you can use pontoons to do all of your tow sports. You can do it for 2 weeks, use it for fishing. It's just so versatile that it makes it a lot easier to go in that direction.

Some of your pontoons aren't cheap, right? I mean, what's the most expensive pontoon you build?

We get up to about $150,000, but there are other manufacturers that get quite a bit higher than that.

And they're nice boats -- and they're really nice boats. Nicole, through our CX, our customer experience department, we see and talk to thousands and thousands of customers. I think we had 8,000 or so last month that you guys had just -- your team had talked to through interactions. So -- we've seen talk to thousands of thousands of retail customers in person, are they're using their RVs, what themes are you hearing and how do you think the company is turning that into a competitive advantage?

Absolutely. So like you said, we are -- one of our core metrics is tracking how many one-on-one hours that we're spending with consumers to make sure that we're really bringing back great information. So -- some of the trends that we're seeing is that there is lot of opinions out there about how to RV, how to do different things with your RV. And they're really looking for a trusted partner to give them sound advice. So whether that is products, whether that is how to use it, where to go, really bringing those trusted resources in and that's something that RV'ers are looking for. So we spend a lot of time curating that content, curating those partnerships, to really make sure that we're enhancing that journey. So the vehicle is just a part of it, but we know that there's a lot more that goes with it. Like Phil said, it's about the experience. So we know if we can help create those experiences that continue to let families enjoy that and pass that down generationally that we have a good opportunity to get it right the first time and then keep folks in our industry.

And I think one of the most powerful tools we use is just listening, right?

Absolutely. Absolutely.

Because being there to listen to what can make the experience better, either from the dealer perspective or the...

Absolutely. And it's that one-on-one time that really builds that loyalty with Lippert that they understand that we truly are listening, both one-on-one and at scale.

Awesome. Awesome. Jon, what are your observations and RVR observations on the changes in trends around the demographics of the people and the types of uses from -- we hear about overlanding, we hear about work camping, we hear about people just being able to work while they camp, and working remote, younger buyers, how are those -- how are some of those trends favorable and what are you guys seeing in there?

Great question. So when I jumped in, in 2018, the demographics from my perspective were great, running all the way out to 2030, thinking about the long-term. So you got 10,000 baby boomers a day retiring, that's still a core customer base. But we also saw younger buyers coming in and OEMs producing much higher quality, especially entry-level product than a decade ago with a lot more technology, Wi-Fi, solar. So nicer product to step into for a new buyer, a more diverse and younger buyer. And then all of that has only just really been accelerated the last 2 years during the COVID surge. So all of those trends are in my mind, sort of multiplied out going forward. So the next decade will be even better than I had thought when we stepped in. And to your point, there's changes in work-life balance, people having the ability to work virtually, having more time to spend in an RV. You can leave on a Thursday, spend time in your Class B over the weekend, through Monday, overlanding, off-roading, you mentioned those uses. There's just so many more diversified uses that have drawn people in over the last couple of years. We still see the trend of younger buyers and new buyers. So it's still above as I look at the data this year, certainly, the retail market has been more challenging due to the macro in 2022. But we still see more new buyers and a younger buyer than 2018 and '19. So you've still got that trend running through in '22, not at the same level as '20 and '21, but above where it was 3, 4 years ago.

Right. And I think ultimately, as we keep talking about the only way we're going to see huge incremental increases in revenue for the business is more people coming and getting that wholesale and retail number up towards 1 million from where it's at today.

Can I talk on that?

Yes, absolutely.

We're nearing almost 6 million booked nights through just the Outdoorsy platform and our...

A lot of those people -- not to interrupt, but a lot of those people might not never tried RVing otherwise.

Most of those people have not. Most of those people rented or tried RVing for the first time booking through Outdoorsy. And what's interesting about the age groups and the landscape is I think -- I'll have to confirm these numbers since we have a room of analysts here, but 70% of most of our booking transactions fall within Gen Z, millennial or younger audience group. But what's really exciting is the fastest-growing segment for us is Gen Z. So the younger people are growing up naturally rejecting hotel, air and tourist attractions in city centers, and they're wanting to fold into the natural environment, and that's where their heart and soul resides. I mean, just look at the focus that all companies are having on sustainability environment. I mean, these are the themes that matter to young people. So what I find most compelling and interesting about what we see on the demand side is these faster-growing segments. And on the supply side, our average owner, I think, is 48, which is a lot younger than most of the traditional owner or buyers. So from an RV sales perspective, you think about these Gen Z families and kids and young millennial moms that are trying out the lifestyle and where are they going to go as their life gets -- moves into different life stages, as they have a larger family, and they're trying to figure out, okay, do I have to do this every weekend and work full time? It's a pretty good lead with Gen Z for sales.

It is a good thing. It is a good thing. And I'm just going to piggyback on that and just ask you real quick. I'm an innovation junky. So one of the coolest things that I've heard in a long time around our industry is you guys make it so easy for the renter that's looking or the guest, right -- guests in house, is that they will deliver the RV to the camp site. So you don't have to worry about picking up a unit and towing it someplace if you really don't want to tow it. Makes it even easier to draw people in to talk about that innovation or innovation in general, how Outdoorsy is thinking about that.

Yes. Yes, it's a product category for us now, and we really see our competition being more centered around hotels. And this is just a perfect way for us to steal share from competitors and also take -- capture more of the consumers' travel wallet through this product. 70% of all of the owners on outdoorsy.com offer delivery. And we're continuing to innovate and build the product experience through mobile apps and through our desktop experience to understand what that means from a renter perspective, right? So you can search and filter and find vehicles that are available for delivery in your area. And what that means is the owner takes the vehicle, sets it up, so you've got predefined campgrounds, destinations, points of interest, boondocking, if you are looking at vehicles with that capability. And the owner will take the vehicle to the location, set it up for you, including like load up the fridge and all of the essentials that you need for the trip. So it's literally like an outdoor hotel room.

And it's what? Your take rate is about 20% or so on that, I mean, of your guests coming in, want a delivery option?

Yes, it is. But I think what's even more compelling from the consumers' perspective is, it's the cheapest product option available. So our average nightly rate is about $220. But in a delivery vehicle, you've saved so much more because -- you don't have to -- you've got lower insurance costs, you have even less gas, not that -- I think that's one of the big myths we need to bust at the industry level that recreational vehicle travel is gas-powered vacations because it's not you using the vehicle in day 1 and day 2. I don't think we're that influenced by fuel. But when you look at a delivery product, it's kind of is erased from the equation. You can take a 4-day trip for anywhere between $700 and $1,100 for a family by getting it delivered.

Phil, why don't you keep on the rental topic and talk about how rental is evolving in boats and how that's impacting you guys selling more boats and us making more parts for boats?

So obviously, I grew up boating. It wasn't really a choice. I was pretty comfortable with it. But I did have an RV experience. And my RV experience was about 4 years ago with 2 other families, and we didn't know what we were getting into. And it was a pretty intimidating experience. So I can only imagine what the experience would be like getting into Marine and it was pretty comical too. But when you're -- one way to get involved with Marine is -- and try a boat out is boat clubs and rental programs, right, going on right now. And it's pretty incredible how fast that's been growing. And what it does is it gives people a chance to try out, trial a boat, see how it works for their family. They can try out different types of boats and make decisions on what they want to do. And I don't know the number, but I know that an increasingly larger quantity of people that go through it, a percentage of people that go through boat clubs, end up buying a boat. And what that's done also is it's gotten people -- traditionally, it's a very rural buyer. And a lot of -- if you're talking about Chicago or Miami or Toronto, it's pretty intimidating to get a slip, deal with maintenance, and all those things. You can get into boat clubs quite easy without all of those costs, and give it a try before you make a complete commitment to it. So...

You're not pulling people for the first time, you've got these clubs that are just buying more boats so that they can rent more right, right?

Right. Right. And the clubs tend to have a younger demographic, which is good for our industry.

Awesome. Awesome. Okay, Nicole, next question. What kinds of programs are we doing in the customer experience world that have been the most impactful and enhancing the overall customer experience for RV or Marine or both?

Absolutely. I think really for RV and Marine, for us, building community, we know that RV'ers and boaters alike, that is part of the lifestyle, is having communities. So whether that is new community, every time you change your location or it's tying up in your same lake with your friends who also live on that lake, we know that there was an opportunity through COVID, where they didn't have that chance to really get together. So for us, we created that space online for folks to join in, to start conversations, to build those relationships in a time which we couldn't do that. That has gone really well for us. So we've got about 18,000 people that are engaging with us on a regular basis through those online communities. And that was great. So the opportunity there was for us to say we don't necessarily care what make, model, style of RV'er or boater that you are, you're all welcome here. And that has been something that's really carried us forward and that people felt that opportunity to ask the questions because it is intimidating to, right, get on a boat the first time or take an RV out. So what we're seeing now as we move forward, sort of out of this pandemic state, is that people are ready to get in one-on-one together. So they're really driving us forward to say, let's get out in the field together, let's camp together, let's get out on the lake together and continue this sort of community effort. So of course, we're always out there listening to what they're [indiscernible].

Awesome. Awesome. And when -- one of my favorite stories is when you were first tasked to start this department for us, your first thought was let's go get a social community around and figure out what people want to say, and I think you said you expected to see a handful of...

About 50. About 50 people. We thought we'd have about 50 people come together when we first started this. And we put a very generic post out, and I said, want to change the future of RVing? And we had 3,000 applications in the first week. So we knew that we were onto something that was really impactful is that these end consumers, the people that are buying these products from us, they want to have a voice. And so we're going to listen and we're going to incorporate that into our business. Again, we can't lose when we're -- we've got that customer in mind.

That's right. John, what's the biggest challenge around product and customer experience you see for the RV industries, whether it's manufacturers, dealers, suppliers? What are the biggest opportunities in RV'ers mind?

Yes, I think it's really 2 things. So one, from an industry perspective, the product quality. And then how we're attacking that is through our investment in service, which we're growing dramatically. And I think the next 10 years, RV service could be one of the best businesses on the whole planet. We've had record years of sales the last couple of years. The industry is amazing in its ability to ramp up and produce at the levels that it's produced. You still have quality issues and with new customers coming in, repeat customers, we want them to have a great experience. So we are working very hard to build out tremendous service capacity doing a number of innovative things also with LCI to create a great experience for customers, both in their RVs through innovation and then in the aftermarket, but a big investment in building that owner relationships so that we're there with them every step of the way and they can have a great experience.

That's awesome. That's good. And then ultimately keep them with your brand for life, and that's the goal. And that's good for all of us, when they stick with something, and they get a consistent experience. And we're glad you're doing that, bringing that to the industry.

Yes. If our customers stay with us in service at any of our 106 stores, they're 3x more likely to buy from us again, than if they don't come back or they go somewhere else. So providing that service experience is super important from a customer loyalty perspective.

Right on. And you're the second largest dealer now and continuing to grow and your footprint is big enough to service anybody anywhere now. So we want you to keep growing and keep doing all the cool, innovative stuff you're doing to help the customers because that's, ultimately -- again, this is going to bring more people back into the RV business or people are going to tell great stories about the RV business. So Jen, how is Outdoorsy planning to further innovate its platform to reach more people? You just talked about 6 million booked nights so far. You guys announced a handful of months ago, you were over $1 billion since inception. So you're growing fast. What kind of innovative things are you planning next?

The future is bright, and our long-term vision and strategy was never just to be a rentals marketplace. It's why called the company Outdoorsy because our intention is to build the thriving outdoor travel ecosystem. And for us, what that means is building all of the safety and trust mechanics that you need to be successful. So all of the insurance products and the check-in, check-out, safety points of measure to all of the panelists on the stage here today. If you don't have quality experience, if you don't have brands that you can count on, whether it's the servicing the parts or the partnerships, and customers aren't going to come back and believe in the marketplace. So that's a lot of work. So anchoring in on our insurance products and our safety products that make the rental experience solid. And then moving across the journey for us, which is rent, stay, do. So we're looking at innovating in new product categories for stays, so accommodation stays. And activities that bring the customer to Outdoorsy for a surround sound set of offerings for any type of outdoor vacation lifestyle, whether it's a day, a week, a long road trip, a month.

Awesome. And again, I think from an RV perspective and a boat perspective, we've -- I think the business we've been doing over the last decade has just fallen in our lap without really putting significant effort into customer experience. So what will happen if we put significant effort into customer experience in the coming years. I think it will be pretty incredible. And there's a lot of stuff being pioneered just within these companies here. So it's pretty cool. Phil, favorable changes in boating geographies and demographics are you seeing to propel the popularity of boating and your lifestyle in your world?

Well, in the last -- up until 2020, the age of the boat buyer got older and older. And what's happened when COVID hit, there was a surge of first-time boat buyers. And a lot of that first-time boat buyers were younger families, people that hadn't traditionally been in boating. That kind of was kind of jump-starting things as far as getting a whole new group of people involved. So we're seeing -- we saw it get younger. But like I said earlier, we've seen a little bit more towards the urban areas because of the convenience of clubs and whatnot. So we're hoping that, that will keep lowering the age and getting more people engaged with boating, moving forward.

Awesome. Awesome. Nicole, how are we going to keep up these initiatives to drive engagement even further? I mean, what are customers asking for right now? What's next for customer experience as you see it?

Definitely. So like I mentioned before, customers are really asking for that one-on-one. So we know that with the younger generations coming in, that it's more about the experience. It's about understanding the company and doing good. It's a little bit less about price. And so we know that's where we can fit squarely in. So again, they're really driving us. They're driving our actions of where we go next in terms of how do we show up for them. A lot of what they're looking for from us today is to continue to support them on their camping journey, their boating journey, again, through content, through sort of creating these training and engagement opportunities for them. But most importantly, we're seeing a lot of success with our getaway activities. So last year, we hosted our very first getaway, which was kind of a traditional RV rally, if you're familiar with that, where we sell tickets and guests come in and just share their time and their family with us. We've actually found that through those engagements, we have one family in particular who was ready to give up RVing altogether. They had spent time in the [Audio Gap], they had come out, and weren't sure really where to settle in, where to settle down, so they decided to full-time RV. Well, our getaway rolled up to their front door, quite literally, in their campground. And what has happened in that time is, they found that welcoming opportunity, the welcoming guests and community, and they're full timers now. They're actually moving into being influencers, sponsored by OEM partners. So we know that, that opportunity of really getting one-on-one with them is going to extend their time in the industry.

And this concept of engagement isn't really foreign. I mean, it's what we're doing in our business with culture. I mean, there is statistical fact that if we can develop a meaningful relationship with our team members, they're going to stay in our business longer. If we develop meaningful relationships with our customers through any of these channels, they're likely to stay longer. So again, it's a point of people pivoting and changing the way they look at customer service and start making sure that there's an experience component to how we deal with the customers day in and day out so that they do stay longer. And if they stay on and guess what, they're likely going to tell friends and family and everybody else kind of about this experience. So I wanted to pitch this softball just to everybody. But with respect to your different areas, how are each of your areas positioned should consumer demand decline. And we're seeing a little bit of that in the RV business right now. How are you guys positioned? And do you feel the outdoor lifestyle has created a new baseline of elevated demand? And it can be for Marine or RV. How are we positioned to take on a consumer -- a decline in consumer demand if there's a recession?

Yes, I would say I think we're already certainly in it. The retail market has been down 20%, 30% year-over-year. Probably a lot of you know that the numbers in RV, so we're in the middle of it. My takeaway is the underlying demographics are tremendous with all of the macro headwinds out there from gas prices to war to interest rates, consumer confidence, the fact that we're still running at a really good level in RV and our business is very strong. The service side is strong. I think the underlying demographics are excellent. Over the next decade, it's going to continue to grow. If you're thinking short term, you certainly have those macro factors, but we keep investing in the customer experience and service our customers. I think there's no question, the trends are fantastic.

Totally agree. And those macro trends, I think, are going to hit hotel and airlines and other travel options a lot harder than our space. So our focus is making sure that, that quality experience and the ease of use, mobile booking, lots of quality supply, great through the line customer service experience, just steal share and competes well against a lot of the land based experiences that you're starting to hear about for air and hotel packages. So definitely agree with that point. For us in Outdoorsy, we are building out new products. I kind of hinted to that a little bit earlier around stays. That's a new category for us. And just love the bigger point around the underlying demographics and the customer base. I mean the world needs more time spent outdoors. This is where -- our company was founded on this human belief that...

I really like that line, that's pretty good.

Yes. 100%. We're building it with you guys. Like, being a part of like inspiring people like on this panel that are actually putting in the effort, the energy to build products and build companies and teams that do this, is where it comes from. For Outdoorsy, our company was founded on the human belief that nature is part of our human nature. And our mission is to restore our relationship with the outdoors. And how we do that is with great partnerships with companies like this, stealing share from other travel options and innovating through into new product categories that to all the points here made earlier, ask the young people what they want, they tell you and then go and make that. But the key to doing that well is the listening part.

That's right.

And being mobile.

Absolutely. I have to agree, Jen. I think what we're seeing too is that accessibility is such a key and retaining future customers as well. But being inspired by nature, I was out in Yellowstone 2 weeks ago, and I was absolutely amazed to see how many young people, how many young families, all ages and demographics, and how they chose to camp differently. We're seeing a lot smaller units, seeing people that feel so inspired again coming out of COVID, coming out of really being trapped in your house, feeling like you want to get out. And then once you're out there, you just see the possibility open up in front of you. And right, with great partners like this, we can make that available to people to continue to grow. And we know our biggest opportunity here is when you bring your family in, many people that we've talked to, they have a story about how they grew up doing this with their grandparents. And how they are now inspired to bring their grandkids out, right? So we can keep that moving. We've got to make it accessible and just really give nature that opportunity to shine.

There is where I think a company like Outdoorsy helps all of the businesses in the category. It's through the accessibility part, right? Because typically, what happened was you got to save $15,000 to $60,000, you've got a go and purchase a vehicle, figure out where to store it and all the rest of it. Outdoorsy just makes accessibility so much easier. It's like the thing -- the line I always talk about is we're like ATMs, right? Like, we're on every single corner or we're only 10 or 20 miles from your doorstep or if you fly into one of those magical places, in moments, you can pick one up also, like 20 miles from the airport. And that access is what just like gets the ease of use and the trial moment. I think you were saying, Jon, like you've got the trial moment, and then that is what drives customers into consideration for a purchase and more days used over the course of the year. So, yes, accessibility and letting mother nature do her thing.

That was a great synergy with our business and Outdoorsy because a reasonable percentage of the people that try it, and if they have a great experience there, they're then going to want to own it. And getting that younger buyer in all of a sudden, they may buy 10 of them over their lifetime, whereas we wouldn't have had that consumer before.

Totally agree. Yes.

You want to comment?

Yes, I would just comment back on the idea of the business and what if the industry takes a step back and Marine is in such a different spot. If you looked at Brian's slide a little earlier, it showed what's gone on over the last 3 years. And we saw a little surge of growth, but we've had trouble actually seeing the increases that RV has seen. And so the inventories that are out there within the dealer network are -- I mean, I think right now, they're averaging about 13 weeks of inventory in the dealer network, and that's a lot more than last year, but it's half of what it would normally be during this time. So we're always kind of restricted because of engines. And so that's kind of left -- depending on who can get engines is who's able to build and sell product, and I think that's kept our inventories. So I don't know -- who knows what the future brings as far as the market, but we're in a pretty decent spot.

Yes. I'm talked to some boat manufacturers that have some pretty long demand. So it's pretty great. I'd say 2 things, just to comment on what these guys all just said, is it 400,000 to 500,000 units built a year, 360 million people in North America, it's pretty lopsided. There's a lot of opportunity there. So I'd say that there's opportunity for our industry in spades. And the more people to get into the lifestyle, the more opportunity we're going to have to build more units. So I think we're getting close on time. But if you guys have anything else you want to throw out before we go to Q&A, now is your time to just -- if we didn't say anything that you want out there, feel free to speak up.

Shout-out to Lippert for being a real star in leadership and a good beacon for the company.

Awesome. Well, thank you.

I would second that. So if you ask me, we're doing a lot of things with Lippert. One of the most influential is the positive culture that we're investing in and building at RV Retailers. So a lot of the things that Jason is doing, I mean, it's cutting edge, not only in RV, but in any industry. So we are actually replicating a lot of those things. And we're sharing, mutually sharing, a lot of great things that we're doing with the culture, which creates passionate associates around providing a get experience to our customers so that they can create lasting lifetime memories. So what you're doing on that side is very powerful.

Awesome. And again, that's how a partnership should work. I mean, partnerships should share their innovation, share their ideas so that ultimately, we can go to the common goal of getting more people to our business, right? So thank you.

The least sexy part of running a marketplace for Outdoorsy is supporting the owner through all of the difficulties, right? I talked a little bit about Roamly, which is our insurance brand and has all of the products to support rental or episodic insurance and insurance products around tire and wheel and other categories. And those are absolutely core to get those right, but so is the service and the parts and the mobile mechanics side of the business. Like, when you think about the consumer's journey, yes, it's important that we make ease of booking and ease of use through mobile apps important. But what really matters is when something goes wrong, are we there for the customer at that time. And this is the hard yards that you have to do all day long and find the right quality partners to work with, build relationships, put programs in place. It's one of the things that we're most excited about Outdoorsy is our mobile mechanics and parts program through Lippert. I actually feel really confident. And so do a lot of our CS agents. When we say, okay, this is the partner that we're looking for, for parts versus a variety of different providers. And I know it's not as sexy as talking about like the culture and the lifestyle, but like this is the foundational bet that makes it work and also through retailers like that.

And really guys digital marketplaces are what's going to help elevate -- I mean, if you look at the fact that companies like Harvest Host and the CampGround digital marketplaces, Outdoorsy and the rental digital marketplaces, those companies don't exist -- I mean, there are certainly people that are buying RVs and RVing more and having a better experience because those digital marketplaces have evolved and exist today. So it's really important to our business as those continue to flourish though. You guys got anything else, you two? Yes, go ahead.

Just can't get over the whole comment about 12 to 14 days a year is all you spend in here. I'm sure Marine is exactly the same. So -- obviously, the downtime means a lot. So we've all talked about experience. So as fast as we can service the customer, means a lot.

Awesome. Well, listen, all 4 you guys. I appreciate you being here. Hopefully, you guys appreciate a little bit different format for today's venue. And these guys are superstars and they're going to help elevate our industry and our business. So I appreciate you guys all taking the time to come here today and help inform our guests. So let's give them a hand.

So we're in the Q&A. And please, like I said, the questions don't need to all come to LCI. These guys would love to help answer questions. It's important that you hear from their perspective as much as ours. So I guess we can open it up. Jeremy, do you want to pass the mic around, I guess? Thanks.

Scott Stember from MKM. John, could you talk about where you see, at least in your business, inventory as we head into open house? A lot has been made of a rebalancing that could take place by brands. Just [Audio Gap] about that, what you're seeing right now?

Yes. At least from our perspective, so we've been going through a strategic realignment to -- so a lot of dealers picked up tier C/D brands on the lot and grabbed as much inventory as they could as we went through COVID because you couldn't get it and the demand was high. We're in a different position now. So the retail market is obviously down from last year. The production was strong in the first half of this year. From our inventory level perspective, we're pretty close to being where we want to be. I think we'll be there by the end of the year from an RV retailer perspective. So we're realigning cutting off lower-quality products, focusing on our premier product providers and then working to drive market share with them. So there's -- and I think other dealers are going through a similar thing. So some of the -- and I think it's healthy. Some of the lower quality product providers that were able to step in and produce stuff that dealers bought sold to customers. That's going to get tightened down here. But I feel like we, RVR, will be in a -- we're a little bit high right now, in a great inventory position heading into '23.

Craig Kennison from Baird. Jen, do you have any data that shows the progression of people whose first try an RV through Outdoorsy and ultimately decide, hey, this is a lifestyle we like, and we want to buy an RV?

Great question. Allow me to update the data in that regard. But some of the last indicative numbers were 7% of users that pass through outdoorsy.com after renting between 1 and 2 times, ended up starting and/or completing a list-your-RV flow. So the inference is that they purchased a vehicle, and -- this obviously takes it one step further because now they're actually thinking about purchasing the vehicle and monetizing it versus your question, which is how many people that try renting a vehicle are interested in buying a vehicle for their own personal use perhaps to support like a growing family or a stage-of-life moment. So we're triangulating around all the data points to support that and would love to keep you updated and informed. How could you not, right? Especially in the next coming years.

Gerrick Johnson, BMO Capital Markets. This question is for Jon and Jen. The long-term demos that you talked about sound fantastic. But a governor on usage right now seems to be campground availability. So 2 questions here. What's the outlook for campground supply? And then two, what can you guys actually do about that?

Yes, great question. I'll take that on. I think there's clearly an opportunity for more both RV storage and then campground supply. What can we do about it? I think there's some great innovations coming into the market. You mentioned Harvest Host. So opening up broader ways for people to enjoy the outdoors than going to traditional campgrounds. So you can go to wineries, farms. It's a great -- if you look on that site, you can kind of see how people are able to enjoy the outdoors in different ways. So -- but clearly, more investment in campground infrastructure over the next decade will be very helpful. People want to be able to enjoy the RV when they buy it. And so we're also -- we're providing -- it's funny because we do these listening sessions, with our teams and our customers. And one of the suggestions for me was, hey, you should go buy 200 campgrounds exclusively for your customers to use, and I thought that might take $1 billion and 10 years to go do. So instead, we have done some partners with campgrounds to provide benefits. So when customers buy, one of the things that we're doing is giving them a campground benefit, helping them with, hey, where they can go to enjoy the great outdoors. So that's part of what we do is educating them on where they can go to get that best experience.

Bret Jordan with Jefferies. Quick 2 questions. I might have missed it on Outdoorsy, did you mention how many people repeat rent? Of the 6 million nights rented, how many people came back and did it again? And that's one question. And then Jon, a quick question for you on retail financing. Are you seeing any pushback on negative equity as real high prices paid in the last 18 months depreciate pretty quickly? When their customers are trading up or are they being able to finance that negative equity pretty easily or banks pushing back at all?

I didn't think I was the oldest person on this stage, but I am definitely the most hard of hearing. I'm not sure if I -- if the -- was the question how many people repeat?

Yes.

Okay. We have seen repeat rates increase year-over-year for the last 5 years, and we do nothing to drive repeat. And so I think our latest number is 26% of all users that come through Outdoorsy repeat purchase. And that's just natural. I think my marketing team was mentioning that our first like push for encouraging repeat in different vehicle usage categories versus the same type of vehicle or the same type of a trip or it being on an annual basis is due to launch. So it's a no-brainer for us to be able to move customers into different vehicle or different trip types, even for myself, when we started the company, Jeff and I sold our houses, we sold every single thing that we owned, and we moved into a 27-foot Eddie Bauer Airstream. And I thought that was the best vehicle like known to man and like how could you want anything else, and it looks so pretty is to top it off. And then over that year and over the next couple of years, I got smaller and smaller and smaller vehicles, and now we just love to try different types because the type of vehicle can dictate the type of trip, and it just brings interest and intrigue. So -- we expect to see repeat RV'ers stay at that and increase as well as like test out new categories, new product categories for repeat.

And I like to add to that as well, we are seeing in our connections with RV'ers that they, too -- they are an owner of an RV'er and yet they are still leveraging Outdoorsy because they either don't want to -- they don't want or can't afford the gas to go to the next location. So they will instead travel another way, rent an Outdoorsy rig, still continuing the lifestyle that they love. They just executed that in a different manner. So that's been kind of an interesting thing we're starting to uncover as we see more users out there continuing to say, "I don't want to go to -- on vacation and via plane. Instead, I want to get out into the world."

I think that you had a second question -- I'm not sure I caught it.

Yes, retail financing. Something about retail financing, please.

Yes, the second question was about negative equity financing. Are the retail lenders pushing back at all on the balances that they're willing to finance on trade-ups?

Yes, I'd say it's a little bit more challenging, but retail credit is very -- still very strong. So I've been very pleased with that as we've gone through the challenging market in '22. So the banks are absolutely still lending. We can get consumers financed a little bit more challenging. And certainly, our interest rates are up 1.5% to 3% from the bank. So monthly payments are higher. We've got to find ways to get consumers into more affordable products. One of the trends I have seen, when you look at the new RV sales from a dealer perspective, consumers -- and this trend has picked up all the way through August and into September this year, but consumers are stepping more into buying used RVs. So retail credit is really good. With affordability and the pricing on new, you have consumers stepping into used. I think that will cycle through. But to me, it shows a healthier market than you can see from the new retail data. So I just want to share that.

Yes, that's great. Yes. And with the cost of payments increasing because of the retail financing, I've heard of this company called Outdoorsy that you can offset some of that increased payment with rental nights.

I'm glad you made that without me having to...

Just joking. What else?

Jon, I was just trying to think through as you shift from the tier C and D, I guess, in '21 into the higher end and recalibrate in 2022, if I'm understanding that correctly. So I guess you're paying higher prices for better product in '22 versus what you were paying in '21. So your purchase price goes up. If that's right, do you keep doing that? Or have you gotten to a point where you're comfortable with your inventory? Or do you keep paying higher prices for better inventory?

Yes, so -- I didn't quite hear it.

Yes. So are you asking if their incoming prices of RVs have tapered off?

Sorry, I didn't make it clear. So let's say, a year ago, you're buying whatever you can get, tier C and D, right? I think that's what you were saying. And then we get into '22, and you start realigning, as you said. So you're buying higher end product, so not C and D but higher end, so you're paying a higher price. Do you keep doing that? Or have you gotten to an inventory level where you're comfortable with that higher end and so you quit paying up for the higher end?

So just to clarify, I don't -- I think he said he was paying higher end products. He was just -- he was talking about a higher quality or a premium brand. Not necessarily at a higher cost, but a Cougar versus a...

Yes. So we're focused on higher quality manufacturers. And then also we are looking at lower price point products that are -- but that are high quality.

Right. But the prices you are paying now versus '21, aren't you paying higher prices?

Yes, significantly higher prices today than we paid in '21 and '20. But we sell products ranging from $10,000 lightweight towables, up to $1 million luxury motorhomes, and everything in between. So the great thing about RV is you've got a quality product at almost any price point. And then I also mentioned, hey, some people are shifting into used but we're dead set on focusing on...

But that shift, that mix shift, have you reached a level where you've now -- you're at a comfortable level or do you keep realigning?

We're in the middle of the realignment. So we started it this summer. It will continue. We're getting close to being where we want to be heading into 2023.

Anybody else? Any further questions?

Brian Biros with Thompson Research. For RVR, have you had to start dropping prices for customers, given -- you say you're paying significantly higher prices now, 2023 units are starting to come on. So for the 2022 units there that are still very high priced, maybe you had to start discounting or how you're getting customers to buy those units knowing I could wait a few months and get a newer unit?

He's asking it for -- what is it?

If you're discounting yet, if you're having to discount much on products on your retail lots.

Yes. I would say a little bit. We're very focused on holding margin. It's not at the level that it was last year. It's definitely not gone back to where margins were in '18, '19 at retail. But we want to offer a premium customer experience. Our model isn't to slash and discount everything and shove product out the door. So we're being very thoughtful about our pricing so that we can provide that high level of customer experience. So we're not running around offering dramatic discounts from where we were. So it's a pretty rational process right now, especially given the drop in retail this year.

This might be helpful. But obviously, we haven't seen retail numbers for September. How is retail traffic for boats and RVs?

Actually really good in RV. We're having a better -- I'd say, better September than I expected. We'll see what the storm impact is here at the end of the month down into Florida through the Carolinas, but it's been good.

Yes, August, September compared to last year is definitely down, but compared to 2019, which is kind of a consistent year to check from everything is pointed up from there.

And then I'll go with a follow-up. I'll get the LCI guys talking again. The target outlook for 2027, the EBITDA margin, looks like, I think it was 13.5%. I think that's about 200 basis points above pre-COVID levels, very roughly. Can you just talk about what is built into that assumption if it's more automation, if it's volume leverage, although it looks like the volume levels you guys are expecting are at levels we've seen before. So just that bump up in margin, can you talk about what is embedded in that?

Yes. I mean a couple of different things. I would say, Brian. The -- one is I think we've continued to say that every time we go through these cycles, you see our margins continue to get a little bit better. So even if you're just focused on RV OEM, I always like to say that at one point in time, it was always in this range of 4 to 6 and then 5 to 7 and then 6 to 8. So you certainly -- as we go through the cycle that we're going through, we will hold on to more margin. We've proven that time and time again. So you've got a little bit of that. And then as...

Just to add to that, I mean a lot of that's just utilization, so automation is a piece of it. I go back to the pillars and say, culture is a piece of it. Innovation is a piece of it. Our Aftermarket will continue to grow and develop and the margins there on the RV side are significantly better than our OEM business. So those would be some of the things, just to tag on to what he said, as to why.

And then second would be continued growth in some of these other markets, like Aftermarket being one of the primary ones that, obviously, over the longer term, the view has been that margin is typically quite a bit better than the OEM side. So as that increases in share, we would have incremental margin.

Awesome. Is there anything -- any other questions for LCI or the panel? Well, thanks, everybody, for coming. We'll stick around and answer questions, show you some products you'd like to see afterwards. Again, thank you, guys, first, for being great friends; then secondly, just doing so much for the industries that we're in and helping make it better so that we can sell more RVs and boats and -- give these guys a hand. Thank you. Thanks. Thank you for coming. I appreciate it.